The IRS released guidance explaining why the standard mileage rate for medical expenses is lower than the rate for business expense deductions. For 2010, the standard mileage rate for medical expenses is 16.5 cents per mile, while the rate for business expenses is 50 cents per mile.  The mileage rates differ because automobile expenses that are deductible medical expenses under Code Section 213 are not the same as those that are deductible business expenses under Code Section 162.

The U.S. Departments of Health and Human Services, Labor and Treasury issued an interim rule that protects the ability of individuals and businesses to keep their current plan while providing important consumer protections that give Americans, rather than insurance companies, control over their own health care.

While the Affordable Care Act requires all health plans to provide important new benefits to consumers, plans that existed on March 23, 2010 are exempt from some new requirements. The “grandfather rule” makes it clear that these plans can continue to contain costs by allowing insurers and employers to make routine adjustments without losing grandfather status. Plans will lose their “grandfather” status if they choose to significantly cut benefits or increase out-of-pocket spending for consumers and consumers in plans that make such changes will gain new consumer protections.

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As you know, HRAs are required to comply under the Medicare Secondary Payer (MSP) mandatory reporting requirements. Responsible Reporting Entities (RREs) must provide information to Centers for Medicare & Medicaid Services (CMS) to identify situations in which group health plans are or have been primary to Medicare.

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The Federal Trade Commission has delayed enforcement of the Red Flags Rule through December 31, 2010. The rule became effective January 1, 2008 with full compliance for all covered entities originally required by November 1, 2008. The FTC has delayed enforcement several times, the latest delay being June 1, 2008.

The Red Flags Rule was developed under the Fair and Accurate Credit Transactions Act, in which Congress directed the FTC and other agencies to develop regulations requiring creditors and financial institutions to address the risk of identity theft. The rule requires all such entities to develop and implement identity theft prevention programs. 

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The IRS issued guidance on the Small Business Health Care Tax Credit which was included in the Affordable Care Act and in effect this year. The credit encourages small employers to offer health insurance coverage for the first time or maintain coverage they already have.

The new details will help employers determine if they are eligible and estimate the amount of the credit they will receive. Small businesses receiving state health care tax credits may still qualify for the full federal tax credit and small businesses can receive the credit not only for regular health insurance but also for add-on dental and vision coverage.

Click here to read Notice 2010-44.

The Departments of Health and Human Services, Labor and Treasury have issued interim final rules on extending health insurance coverage for adult children up to age 26. The regulations apply to health coverage for plan years beginning on or after Sept. 23, 2010. Under the Patient Protection and Affordable Care Act, employee benefit plans and health insurers that offer dependent coverage to children must now make the coverage available to adult children up to age 26.

Click here to read Notice 2010-38.

Click here for a series of FAQs.

Click here for a fact sheet.

Included in the EBSA data, you can find information on closed Form 5500 cases that resulted in penalties for deficient, late, or unfiled 5500s (updated quarterly). This website will be updated over time with additional features, functionality, and search criteria.

Click here to view the web site.

Employers may also find useful three items found under a heading "House Committees Health Insurance Reform:"

• Summary providing an easily digestible overview of the PPACA
• Implementation Timeline 
• Summary document of Employers and Health Reform, broken down in three headings (small employers, larger employers, and all employers)

Click here to view webpage.

The IRS announced that under the Affordable Care Act, health coverage provided for an employee’s children under 27 years old is now generally tax-free to the employee, effective March 30, 2010. These changes allow employers with cafeteria plans to permit employees to begin making pre-tax contributions to pay for this expanded benefit, even if the cafeteria plan has not yet been amended to cover these individuals. Plan sponsors then have until the end of 2010 to amend their cafeteria plan language to incorporate this change.

Employees who have children who will not have reached age 27 by the end of the year are eligible for the new tax benefit from March 30, 2010 and forward if the children are already covered under the employer’s plan or are added to the employer’s plan at any time.

This replaces the lower age limits that applied under previous law, as well as the requirement that a child generally qualifies as a dependent for tax purposes.

Click here to read IRS Notice 2010-38.

A number of changes pertaining to FSAs, HRAs and HSAs, resulting from the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Tax Credit Reconciliation Act of 2010 are going into effect in 2011.

Over-the-Counter medicines will no longer be reimbursable from a FSA, HRA, or HSA after Jan. 1, 2011 without a doctor’s prescription. The Jan. 1, 2011 date refers to the tax year not the plan year. If the plan year is not a calendar year and straddles 2010 and 2011, the plan must discontinue reimbursement for over-the-counter medicines purchased Jan. 1, 2011 or after.

Non-qualified distributions made after Dec. 31, 2010 from a HSA will be subject to a 20% excise tax, as well as income tax. That is an increase from the current 10% excise tax.

Cafeteria Plans sponsored by Employers with 100 or fewer employees during either 2009 or 2010 will have a safe harbor from nondiscrimination rules for tax years beginning Jan. 1, 2011, provided certain requirements are met such as (a) all non-excludable employees are eligible to participate and (b) certain minimum contribution requirements are met.